Paciullo and Paciullo - [2020] FamCAFC 169

FAMILY COURT OF AUSTRALIA

PACIULLO & PACIULLO

[2020] FamCAFC 169

FAMILY LAW – APPEAL – PROPERY SETTLEMENT – Appeal from orders dividing the parties’ property in shares of 58 per cent to the wife and 42 per cent to the husband – Where the grounds of appeal contend material error, factual mistakes and errors by the primary judge in the exercise of discretion – Where the ground alleging a lack of procedural fairness is rejected – Where assertions relating to the primary judge’s failure to take into account material considerations are rejected – Where the overall result is not so unreasonable or plainly unjust to impugn the exercise of discretion by the primary judge – Where the primary judge’s reasons are adequate – Where no error in the primary judge’s exercise of discretion – Where the appeal succeeds because of an error made in respect of the value of the husband’s unit holding in a unit trust – Appeal allowed in part – Re-exercise of discretion – No order as to costs.

Family Law Act 1975 (Cth) Pt VIII, ss 75(2), 79(2), 79(4)

Family Law Rules 2004 (Cth) r 22.09

Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
De Winter and De Winter (1979) FLC 90-605
Finch & Finch (2020) FLC 93-949; [2020] FamCAFC 60
House v The King (1936) 55 CLR 499; [1936] HCA 40
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11
Marcin & Marcin (2020) FLC 93-956; [2020] FamCAFC 85
Marcin & Marcin (No. 2) [2020] FamCAFC 142
Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30
Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594; [2011] HCA 1
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88
Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48

APPELLANT:

Mr Paciullo

RESPONDENT:

Ms Paciullo

FILE NUMBER:

PTW

1240

2015

APPEAL NUMBER:

WEA

2020

DATE DELIVERED:

20 July 2020

PLACE DELIVERED:

Newcastle

PLACE HEARD:

Perth (via video link)

JUDGMENT OF:

Strickland, Austin & O'Brien JJ

HEARING DATE:

22 June 2020

LOWER COURT JURISDICTION:

Family Court of Western Australia

LOWER COURT JUDGMENT DATE:

5 November 2019

LOWER COURT MNC:

[2019] FCWA 229

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Cridland

SOLICITOR FOR THE APPELLANT:

GG Legal

COUNSEL FOR THE RESPONDENT:

Mr Hannan

SOLICITOR FOR THE RESPONDENT:

JK Legal

Orders

The appeal is allowed in part.
The figure of $713,913 is substituted for the figure of $738,425 in the Schedule of assets and liabilities annexed to the orders made by the Family Court of Western Australia on 16 December 2019.
No order as to costs.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Paciullo & Paciullo has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WEA 2 of 2020
File Number: PTW 1240 of 2015

Mr Paciullo

Appellant

And

Ms Paciullo

Respondent

REASONS FOR JUDGMENT

Introduction

Mr Paciullo (“the husband”) appeals from orders made on 16 December 2019 by a judge of the Family Court of Western Australia effecting the division of the parties’ property and superannuation interests pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”). Ms Paciullo (“the wife”) opposed the appeal.
The essential effect of the appealed orders was to divide the parties’ property in shares of 58 per cent to the wife and 42 per cent to the husband, for which purpose the divisible property included the jointly-owned former family home and the husband’s unit-holding in a Unit Trust carrying on valuable commercial activity, but excluded the wife’s vested entitlement in overseas real property she inherited shortly before trial.
For the reasons which follow, the appeal must succeed in part because of an erroneous finding made by the primary judge in respect of the value of the husband’s unit-holding in the Unit Trust, but the error can be rectified in the re-exercise of discretion.

Background

The parties were both born in 1971 and are aged in their late forties.
They met at school and began a relationship while teenagers, but did not commence cohabitation until their marriage in 1997. They finally separated in 2014. Their two children, who were teenagers then, are adults now.
The property settlement proceedings were commenced by the wife in March 2015, about one year after the parties’ separation.
The proceedings were heard by the primary judge in September 2019 and the reasons for judgment were delivered in November 2019. The reasons explained the intended division of the parties’ respective property interests, but the primary judge did not actually then make the property settlement orders. Rather, his Honour invited the parties to bring in orders reflecting the reasons for judgment. They did so on 13 December 2019 and the appealed orders, adopting the parties’ minute of proposed orders, were made by the primary judge on 16 December 2019.
To effect the property settlement in the appropriate shares, the orders required the parties to sell the former family home and proportionally divide the net proceeds of sale, required the wife to assign to the husband her unit in the Unit Trust, and otherwise provided for the parties to retain their individual interests in real and personal property.
Although the appeal attempts to deconstruct various findings of the primary judge, the central theme of the controversy, both at trial and in the appeal, was the husband’s financial interest in the Unit Trust, and in particular: the value of his unit-holding in the trust; the value and enforceability of the debt he allegedly owes the trust; and the distributions he receives from it.

Material error

The Unit Trust is administered by a corporate trustee. The husband and his mother are the equal shareholders in and the joint directors of the corporate trustee, which corporation conducts a commercial fishing business on behalf of the Unit Trust. The profit generated by the business is distributable to the beneficiaries of the Unit Trust.
Several facts about the Unit Trust were incontrovertibly established at trial: the husband and his mother are beneficiaries of the Unit Trust; the husband holds 10 of 95 ordinary units in the Unit Trust; the husband additionally holds one of seven special par units in the Unit Trust; the distribution of trust income to ordinary unit-holders should be proportionate to their unit-holdings; the distribution of trust income to special par unit-holders is discretionary; and even though the husband’s ordinary unit-holding amounted to about 10.5 per cent, the trust distributions over preceding years had consistently been 20 per cent to him and 80 per cent to his mother.
At trial, the husband initially contended that the disproportionate distributions to him were an error, either because he and his mother (as directors of the corporate trustee) wrongly treated the trust as a discretionary trust instead of as a unit trust or because he was mistakenly overpaid. Significantly, there was no evidence to substantiate either of those theories, as the primary judge noted (at [81], [113], [121], [175]).
Another possible inference was that 20 per cent of the trust income was annually distributed to the husband to cover both his unit-holding entitlement and as a discretionary payment for his special par unit, upon which idea the husband belatedly seized, but the primary judge did not make that finding due to the lack of evidence (at [84]). Although the Unit Trust’s accountant confirmed the trust deed allowed for discretionary distributions to the special par unit-holders, there was no evidence at all to confirm that had actually occurred in respect of the husband.
At the time of the parties’ separation in 2014, the husband had no liability to the Unit Trust. In fact, the Unit Trust owed him $18,614. However, by late 2018, the Unit Trust financial records showed the husband was indebted to the trust for $232,000 and, for the 2019 financial year, the draft Unit Trust financial records showed the husband owed the trust $370,994. Notwithstanding the 2019 financial data was only in draft form, it was tendered in evidence (Exhibit 7).
At trial, the husband tried unsuccessfully to link such debt to his post-separation distributions from the Unit Trust. He did not assert the debt was created under a loan account, reflecting his liability to repay distributions intentionally advanced to him in excess of his unit entitlements as a loan. Rather, he seemed to contend that the debit account was created to record the amount which was recoverable from him in the form of excessive distributions paid to him by mistake. The contention was entirely speculative because there was no evidence to establish the fact, as the primary judge observed (at [113]). Either of those theories was, in any event, contradictory to the husband’s ultimate submission that he was consistently paid twice the value of his ordinary unit entitlement as a discretionary payment for his special par unit. If he was properly entitled to the distributions in that manner, it must follow there was no basis at all upon which he was liable to repay any of it to the Unit Trust.
The husband asserted, at trial and in the appeal, that the debt which the Unit Trust financial records reveal he owes the Unit Trust is legally enforceable. However, his counsel expressly conceded the primary judge had wide discretion about how the liability should be treated. In cross-examination, the husband conceded he had not repaid any money to the Unit Trust in the past and, further, he regarded the enforceability of his liability to the Unit Trust as being entirely dependent upon his mother’s discretion (at [114], [120]), which cannot be correct given his joint legal control under the existing corporate and trust structure. Ultimately, the primary judge determined (at [109]-[114], [119]-[126]) to disregard the debt as an enforceable liability in reliance upon the principles discussed in Biltoft and Biltoft (1995) FLC 92-614 (“Biltoft”).
Even though the value of the husband’s unit-holding in the Unit Trust was an issue of significant dispute, the parties did not procure any single expert evidence about it. Instead, the husband relied upon the evidence of the Unit Trust’s regular accountant to establish the value of his unit-holding, to which evidence the wife did not take objection. The husband called a marine broker to give opinion evidence about the value of some of the Unit Trust’s business assets. The wife did not object to that evidence either.
The primary judge said this in respect of such expert evidence:
94[The Unit Trust’s accountant] has also prepared what purports to be a valuation of the unit trust, although she did not demonstrate any qualification to do so nor was appointed under the Family Law Rules (2004) (Cth) (“the Rules) to do so.
95In essence, she has taken historical information, produced a balance sheet and called such “a valuation”.
96Both counsel agreed that the figures contained therein did not reflect current values, but the issue of valuation had never been properly addressed pre-trial.
97This was highlighted by the filing, without leave, on 11 October 2018 of an affidavit of [the marine broker]. [He] is a marine broker and company director of [a corporation], of which he is the sole director and shareholder, and which trades as [a business name]. His business is involved in the sale or lease of the relevant [fishing] licences.
98Notwithstanding the relevant rules applicable to expert evidence and evidence of value as prescribed in the Rules, which appear to have been entirely ignored, no objection was ultimately taken to [the marine broker’s] assessment of the value of the relevant [fishing] licences, as at or during “the 2017-2018 season”, and as advertised for sale.
…
100It beggars belief that in the proper presentation of this matter, where the net assets of the unit trust exceed $7,000,000 that no proper attempt was made or apparently made to properly value the assets of the unit trust.
101With all due respect to both counsel, they appear to be content to leave it to the Court to act as valuer relying upon [the marine broker’s] opinion as to the values of the relevant assets, and otherwise it would seem simply relying on historical values recorded in the draft account for the purposes of producing what might best be described as an ad hoc asset backed value of the unit trust.
…
107Counsel for the wife opened on the basis that there should be an uplift in the value of the [fishing] licences, but no admissible evidence was received in support of such an uplift. The position was never adequately addressed by the counsel for the husband, whilst to some extent he sought to “cherry pick” from the draft account for the year ending 30 June 2019 as to his client’s alleged debt, whilst ignoring the issue of the lack of compatible currency of the valuation of the [fishing] licences.
108The situation is entirely unsatisfactory. The best evidence before me to which objection was not taken, and notwithstanding its unsatisfactory nature, is the evidence of [the marine broker] and then the transposition of his opinion into [the Unit Trust’s accountant’s] statement of assets and liabilities, which she considers to be a valuation.
The primary judge’s ultimate finding in respect of the value of the husband’s units in the Unit Trust was expressed in these terms:
127Accordingly, I find that the husband’s interest in the unit trust is ten ordinary units which have a nominal value of between $727,793 and $749,056, together with one special par unit, which has no value, other than as a means to distribute a resource from the unit trust to the husband.
128There is no evidence before me as to where an appropriate figure falls within that range and as undesirable as it is to do so but to be fair to each of the parties, I propose to adopt a midpoint of $738,425 (rounded).
The finding, however, was made in error.
Having already determined to disregard the husband’s alleged debt to the Unit Trust as an enforceable liability, to avoid double-dipping, the primary judge was then obliged to disregard the debt as an asset of the Unit Trust. The primary judge did not do so. The liability was assumed to be recoverable and was characterised as a chose in action and, hence, an asset of the Unit Trust.
The error is patent because the point was expressly discussed during final submissions, as the following excerpt of the transcript reveals:
…
HIS HONOUR: Yes. The debt is shown as an asset to the trust.
[COUNSEL FOR THE HUSBAND]: That’s right.
HIS HONOUR: And the liability is shown as a personal liability as against your client’s share.
[COUNSEL FOR THE HUSBAND]: Yes. So you can’t simply take it out the bottom and - - -
HIS HONOUR: I wasn’t going to.
[COUNSEL FOR THE HUSBAND]: I simply understood - - -
HIS HONOUR: That’s why I said if it comes out it has got to come out as an asset, and it comes out as a liability.
[COUNSEL FOR THE HUSBAND]: That’s right…
(Transcript 26 September 2019, p.145 lines 30–48)
The Unit Trust’s accountant’s calculations are extracted in the reasons for judgment (at [105]). If the husband’s loan account is disregarded, both as his liability and as the Unit Trust’s asset, then, using the accountant’s figures, the husband’s ordinary unit-holding in the Unit Trust falls in the range of $703,281 to $724,544, the average of which is $713,913 (rounded) instead of $738,425 (rounded). The difference of $24,512 is not so insignificant as to justify it being dismissed as de minimis.
The identified error was not the subject of any complaint or mention by the husband, either in the grounds of appeal or in his Summary of Argument, but that does not mean it can or should be ignored. This is an appeal by way of rehearing, the procedure of which requires the correction of material error when it is identified (Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 at [30]-[32]; Warren v Coombes (1979) 142 CLR 531 at 552-553). When we raised the apparent error at the commencement of the hearing of the appeal, both parties recognised it and agreed it could be corrected by substitution of the correct value in the orders.

The appeal

The appeal was commenced by a Notice of Appeal filed on 10 January 2020.
Pursuant to procedural orders made by the Regional Appeals Registrar on 13 February 2020, the husband had until 17 April 2020 to file his Summary of Argument. Accordingly, pursuant to r 22.09(1) of the Family Law Rules 2004 (Cth) (“the Rules”), he was at liberty to amend the grounds of his appeal until that point in time.
The husband did not file his Summary of Argument until more than a month later on 19 May 2020 and purported to amend the grounds of his appeal within the Summary of Argument without seeking leave to do so. The husband filed an Application in an Appeal on 3 June 2020 seeking leave to excuse the late filing of his Summary of Argument, but not to amend the grounds of his appeal. At the appeal hearing, the husband submitted that leave to amend his grounds of appeal was unnecessary because, once leave was given to excuse the late filing of his Summary of Argument, r 22.09(1) of the Rules automatically permitted the amendment.
The wife opposed leave being granted to the husband to amend the grounds of his appeal, but she conceded she would experience no prejudice because she had more than one month’s notice of the proposed amended grounds and ample time to consider them. We therefore determined to grant leave permitting the late filing of the husband’s Summary of Argument and, for abundant caution, the amendment of his grounds of appeal to those set out within his Summary of Argument.
However, given the late amendment of the husband’s grounds of appeal, he is strictly bound by the ambit of those revised grounds. We decline to entertain any submission made by him, either written or oral, which strays beyond the parameters of the amended grounds.

Ground 2

This ground alleges the lack of procedural fairness, which is an asserted defect in the administration of justice, so it should be dealt with first (Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 581, 611-612, 634; Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 at [9]-[10]).
The husband contended he was not afforded procedural fairness by reason of:
a)the primary judge’s interjections during the wife’s cross-examination;
b)the primary judge’s “unwillingness” to hear arguments or lines of questioning by the husband’s counsel;
c)the primary judge’s expression of preliminary views;
d)conduct of the evidence-in-chief of the husband’s expert witness;
e)comments made by the primary judge about the husband, his expert witness and his lawyers, both during the hearing and in the reasons for judgment; and
f)the primary judge’s failure to raise with the husband’s counsel that his Honour was contemplating making orders which would likely require the husband to sell his units in the Unit Trust and create tax liabilities for him.

The submission broadly put in support of this ground of appeal was in these terms:
From the outset of the trial to the end of the reasons, the evidence of the husband and his witness, [the Unit Trust accountant], was criticised as were the lawyers who assisted in its preparation.
The husband contended the primary judge’s intervention in the trial was so egregious as to invoke the principles discussed by the Full Court in Finch & Finch (2020) FLC 93-949.
The excerpts of the transcript upon which the husband relied to vindicate his submission failed to actually do so.
During the wife’s counsel’s opening address, the primary judge flagged his concern about the lack of single expert opinion evidence in relation to the husband’s unit-holding in the Unit Trust, but that was commentary on both parties’ failure to adhere to the Rules. The husband’s counsel was given the opportunity to comment upon anything said in the discourse between the primary judge and the wife’s counsel during the opening address, but he then only raised one question about a document referred to by the wife’s counsel. The parties were given some time to finalise their negotiations over an adjournment, but no settlement was achieved. Afterwards, the husband’s counsel made some introductory submissions to the primary judge concerning the distributions made to the husband under the Unit Trust.
The wife was then called and cross-examined by the husband’s counsel. There were numerous interruptions to the cross-examination but, in our view, not such as to be characterised as undue or improper.
The primary judge sought clarification from the husband’s counsel about whether he contended the wife was already unconditionally vested with title in the overseas real property and interjected to correct counsel’s inaccurate references to the wife’s denial instead of a non-admission and to the content of some documents, but otherwise intervened to adjudicate objections taken by the wife’s counsel. The primary judge was obliged to determine evidentiary objections.
At two points, the transcript reveals the primary judge expressed some mild exasperation when the husband’s counsel was challenging the wife’s credibility over particular transactions of modest value many years before the parties even separated, which we regard as unremarkable. On the second occasion, the primary judge acceded to the husband’s counsel’s request for a short adjournment to re-calibrate his cross-examination.
Eventually, the primary judge intervened to seek clarification from the husband’s counsel as to why he was pressing the wife about the circumstances of the husband’s prior criminal prosecution, which resulted in his conviction and imprisonment for having assaulted her and the husband’s additional breach, on numerous occasions, of a family violence order made for her protection. The husband’s counsel confirmed the enigmatic purpose of the cross-examination was to demonstrate that the wife had impaired the husband’s income-earning capacity by reporting his criminal behaviour, because it led to his imprisonment. Apparently, not all of the wife’s allegations of the husband’s breaches of the family violence order were accepted by the State court and so the husband contended those which were dismissed were malicious and vexatious.
We regard the primary judge’s rebuke of the husband’s counsel for attempting to blame the wife for the husband’s criminality and thereby try and accrue some advantage in these civil proceedings to have been warranted, but nevertheless courteous and restrained. His Honour allowed the husband’s counsel a short break to take further instructions concerning his pursuit of the issue and, upon resumption, counsel wisely said he wanted to move on to another topic. The cross-examination was then concluded uneventfully.
The husband’s counsel ran into some further difficulty when re-examining the husband but, again, the primary judge was called upon to adjudicate objections legitimately taken by the wife’s counsel.
The husband elicited evidence from the Unit Trust’s accountant in his case. Again, when required, the primary judge determined objections made by the wife’s counsel to oral evidence-in-chief, but also objections raised by the husband’s counsel during cross-examination. While the primary judge asked a number of questions directly of the witness, no objection to that was raised, nor could it sensibly have been. The husband’s counsel was not in any sense inhibited in his own questioning of the witness.
In final submissions, the husband’s counsel was challenged about various submissions he made, but such challenges ought to be expected by advocates. Numerous factual and legal controversies needed to be debated. No exchange between the primary judge and the husband’s counsel, at least on the face of the transcript, could be described as overbearing or offensive. It was not submitted that the primary judge raised his voice and we were not invited to listen to the recorded evidence to discern either undue volume or improper tone.
The complaint that the primary judge made comments which were critical of the preparation and presentation of the husband’s case must be viewed in that context. The husband did not contend, either at trial or on appeal, that such comments could reasonably have given rise to an apprehension of bias. Such a submission was not objectively available. The husband’s reference in his Summary of Argument to an obviously facetious comment made by the wife’s counsel to the primary judge in complimentary terms does not alter that conclusion. The primary judge was entitled to be critical of the state of the evidence and, more generally, the parties’ preparation for trial. His Honour’s comments on that topic were reasonably restrained.
The final aspect of this ground of appeal was the husband’s contention that the primary judge deprived him of procedural fairness by not raising with his counsel, for his comment, the prospect that orders might be made which would compromise the husband’s chance to retain his unit-holding in the Unit Trust. That submission is also rejected. We describe below the way in which the wife conducted her case. It must have been apparent to the husband that orders could be made consistent with those propounded by the wife. When critical issues and the range of outcomes in the proceedings are well known to the parties, as was the case here, the judge is not required to expose his or her thought processes or provisional views for comment before making the decision (Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594 at 599).
In short, no aspect of the manner in which the trial was conducted verified the husband’s complaint that he was denied procedural fairness.

Ground 1(a)

This ground contended the primary judge erred in the exercise of discretion by taking into account an “extraneous or irrelevant matter”, namely that the husband was an “unsophisticated man [who] had not read all of his disclosure [documents]”.
The first point to make is that the primary judge did not say, either during the trial or in the reasons for judgment, that the husband was an:
…unsophisticated man [who] had not read all of his disclosure [documents].
The primary judge did say in the reasons for judgment (at [19]):
…As counsel for the wife put to him “it is handy to read your disclosed documents”.
The wife’s counsel did not say that to the husband. He actually said, during the husband’s cross-examination:
Sir, why don’t you read your own documents…
(Transcript 26 September 2019, p.70 line 42)
The comment, which was an unnecessary precursor to the question then asked, was made during the husband’s interrogation about the extent of his unit-holding in the Unit Trust, over which there was a factual dispute, and the distributions made to him by the Unit Trust, which distributions had been greater than and disproportionate to his ordinary unit-holding. The husband was being challenged over the inconsistency between his belief about the extent of his unit-holding and the contents of official documents disclosed by him during the litigation.
The primary judge referred inaccurately to that comment in the reasons for judgment at the point where his Honour was explaining why he accepted the husband was an honest witness. His Honour concluded, as was both well open and consistent with the husband’s evidence, that the husband had little personal knowledge of the operation of the Unit Trust, as he left the affairs of the Unit Trust in the hands of his mother, even though it was common ground he and his mother were the directors of and equal shareholders in the corporate trustee of the Unit Trust.
Far from criticising the husband for his lack of commercial sophistication and then using such unsophistication to adversely influence the overall exercise of discretion, as this ground wrongly alleged, the primary judge accepted the husband’s evidence that he was ignorant of the Unit Trust’s financial affairs because he left the financial management of the trust entirely to his mother.
That fact was not an “extraneous or irrelevant matter”, because it bore upon the quality of the evidence adduced about the extent and value of the husband’s units in the Unit Trust, the income distributions to him from the Unit Trust over prior financial years, the likelihood of further income distributions to him from the Unit Trust over future years, and whether the Unit Trust was likely a financial resource for him over and above his unit-holding. In the absence of any probative evidence from the husband about those issues, attention then had to focus upon other potential sources of such evidence: documentary records of the Unit Trust; evidence from the accountant (whose evidence the primary judge found to be relatively unhelpful); and evidence from the husband’s mother, the only other director of the trustee corporation (who was not called as a witness).
This ground of appeal fails because the primary judge made no finding as to the husband’s “sophistication”, or lack thereof, and, regardless, the husband was accepted as a witness of truth. His evidence was largely accepted.

Ground 1(b) – failure to take material considerations into account

One part of Ground 1(b) contends the primary judge erred in the exercise of discretion by failing to consider relevant and material matters, being:
a)the “similarity” of the parties’ income and income-earning capacity;
b)the nature and amount of child support provided by the husband;
c)the husband’s loan account with the Unit Trust;
d)the wife’s failure to make adequate disclosure, including as to her overseas property interests;
e)the wife’s decision not to call the husband’s mother as a witness in her case; and
f)the parties’ initial and post-separation contributions.
The assertion of the primary judge’s “failure to consider” the “similarity” of the parties’ income and income-earning capacity is rejected.
It was common ground at trial that the wife’s income was $1,064 per week (at [174]). The husband received passive income through the Unit Trust and did not otherwise use his skills to earn extra income (at [56], [176]-[177]). He admitted such passive income amounted to an estimated $1,384 per week. The primary judge did not fail to take those facts into account. They were expressly considered in the context of whether any adjustment was warranted on account of factors prescribed by s 75(2) of the Act. As was undoubtedly correct, the primary judge found the husband has a greater earning capacity and income (at [184]), regardless of how the difference is quantitatively described. In final submissions, the husband’s counsel conceded the husband earned between $25,000 to $30,000 per annum more than the wife, which he submitted was “not an enormous difference”, but which he conceded would likely continue into the future. The husband can hardly now disavow the continuing differential in the appeal.
The assertion of the primary judge’s “failure to consider” the nature and amount of child support paid by the husband is rejected. The primary judge recorded how the husband paid the wife non-periodic child support and other amounts directly to the children for their benefit in the period between separation and trial (at [160]). That fact was noted by the primary judge in the discussion of the parties’ respective contributions. By the time of trial, both children were adults (at [2]), so child support was irrelevant as a feature under s 75(2) of the Act.
The assertion of the primary judge’s “failure to consider” the husband’s loan account with the Unit Trust is rejected because his loan account was given express consideration by the primary judge (at [109]-[126]), though the ultimate finding was not to the husband’s liking. As already explained, the primary judge determined to disregard the loan account as an enforceable debt. This ground of appeal did not extend to the correctness of that finding.
The assertion of the primary judge’s “failure to consider” the wife’s failure to reveal her overseas property interests and to make adequate disclosure is rejected because there was no material failure to be considered.
The husband did foreshadow the wife’s disclosure of her “income, expenditure, property and financial resources” as an issue for the trial in his Case Outline document, but pursuit of the issue would have been an exercise in futility. The wife admitted, in response to the husband’s Notice to Admit Facts, her prospective ownership of an overseas property by way of inheritance from her late father, the value of which was agreed upon by the parties at trial (at [129]-[136]). The overseas property was disclosed in the wife’s trial affidavit. She was only challenged in cross-examination about the omission of the property from her disclosed list of relevant documents, but her alleged failure to disclose any documents relating to the property was hardly material, given the concessions of her conditional ownership and the value of the property. The wife was not challenged in cross-examination about any other alleged failure of disclosure or the asserted inaccuracy of the financial circumstances to which she deposed in her filed financial statement. Nor did the husband assert the wife’s derelict disclosure in final submissions.
The assertion of the primary judge’s “failure to consider” the wife’s decision not to call the husband’s mother to give evidence is rejected.
The primary judge remarked more than once that, absent any helpful evidence from the husband and the Unit Trust’s accountant to explain the amount of the trust distributions made to the husband and the irreconcilability between the amount of such distributions and the debit balance of his loan account, it was incumbent upon the husband to explain the anomaly by adducing evidence from his mother. She was the only one who could give explanatory evidence because it was common ground she took charge of the financial affairs of the Unit Trust.
As the primary judge observed (at [86], [118]), the husband contended the lacuna in the evidence could have been cured by the wife calling his mother as a witness instead, but the primary judge understandably rejected the proposition. It was for the husband to make good his case; not for the wife to fix it for him. Even though the husband asserted the wife could have called his mother as her witness, she did not do so and he did not then submit for an adverse inference to be drawn (Jones v Dunkel (1959) 101 CLR 298 at 308, 312, 320-321; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 385). Nor, despite the wife’s request to do so, did the primary judge conversely draw an inference that the husband’s mother’s evidence would not have assisted his case. The husband said his relationship with his mother was “strained”, so the primary judge concentrated on the quality (or lack thereof) of the evidence actually adduced. The primary judge said the failure to call evidence from the husband’s mother as a witness “leaves the Court with some considerable uncertainties as to the propositions advanced by and on behalf of the husband” (at [21]), which was undoubtedly true.
The assertion of the primary judge’s “failure to consider” the parties’ initial contributions and post-separation contributions is rejected. His Honour specifically recorded and made findings about the parties’ initial contributions (at [29]-[33], [149]-[154], [157]) and their post-separation contributions (at [56], [159]-[160], [177]), then found the husband’s greater initial contributions made his overall contributions modestly greater (at [158], [163]).

Ground 1(b) – factual mistakes

The remainder of Ground 1(b) contends the primary judge erred in the exercise of discretion by mistaking the facts about:
a)the value of the husband’s units in the Unit Trust; and
b)the absence of any agreement between the parties about the increased value of the husband’s units in the Unit Trust by an “uplift factor”.
The assertion of the primary judge’s mistaken factual finding about the value of the husband’s unit-holding in the Unit Trust is rejected – at least for the reasons advanced by the husband.
As earlier explained, the primary judge found the best evidence of value was the combined evidence of the two experts called by the husband, which evidence was accepted to thereby establish the value of the husband’s ordinary units in the Unit Trust at $738,425 (rounded) and the value of his special par unit at nil (at [127]-[128]). Although it outwardly seems novel for the husband to contend the primary judge made an erroneous finding of value when the finding was premised on the evidence he adduced, the husband’s point was that the primary judge failed to discount the value of his ordinary units by the amount of his loan account with the Unit Trust, which was the valuation method adopted by the Unit Trust’s accountant (at [105]).
The primary judge’s disregard of the husband’s asserted loan account was premised on legal principles and properly explained by the primary judge (at [109]-[114], [119]-[126]). The alleged liabilities of parties may be disregarded or discounted in property settlement proceedings under Part VIII of the Act when they are vague, uncertain, or unlikely to be enforced (Biltoft at 82,127), as the husband’s loan account with the Unit Trust certainly is on the available evidence. The primary judge could hardly have found otherwise, given the state of the evidence. The official records of the Unit Trust curiously did not disclose the existence of the husband’s loan account until October 2018, when the Unit Trust’s accountant prepared a Compilation Report barely a week before she prepared her affidavit for use in the proceedings.
The primary judge made no mistake of fact in the analysis of the evidence concerning the alleged loan account, which is the limit of this ground of appeal. There was no contention of any mistake of law. However, as we earlier explained, the primary judge erred by then failing to deduct the husband’s loan account from the assets of the Unit Trust, which mistakenly inflated the value of the husband’s unit-holding by $24,512.
The assertion of the primary judge’s mistaken factual finding about the absence (or existence) of any agreement between the parties about an increase in the value of the husband’s unit-holding in the Unit Trust on account of an “uplift factor” is accepted as correct, but dismissed as immaterial. Mistaken facts do not sustain an appeal unless they influenced the final result (De Winter and De Winter (1979) FLC 90-605).
At trial, the husband relied upon the evidence of the Unit Trust’s accountant and the marine broker to establish the value of his unit-holding in the Unit Trust at between $494,927 and $516,190 (at [105]). During the trial, with the husband’s consent, the wife tendered a joint schedule of assets and liabilities setting out their respective contentions about the existing assets and liabilities (Exhibit 1). In that document, as the primary judge noted (at [67]-[68]), the husband contended for the value of his unit-holding in the Unit Trust at $505,557, which is the mean value of the range opined by the accountant.

During final submissions, the husband contended for his unit-holding to be valued at only $380,000, based on some arithmetic performed individually by his counsel in reliance upon draft financial data for the 2019 financial year (Exhibit 7), but the submission found no favour with the primary judge because it wrongly assumed the husband was and will remain liable to the Unit Trust to the extent of $370,994 under his loan account.
As the primary judge noted, the wife had contended the husband’s unit-holding was more valuable when proper allowance was made for the increase in value of some of the assets of the Unit Trust’s business (at [107]), but his Honour’s subsequent references in the reasons to the husband’s concession of some such unquantified “uplift factor” (at [169], [186]) were erroneous. The husband made no such concession at all. The concession he made in final submissions about an “uplift” related to an increase in value of multiple superannuation assets.
In the appeal, the husband argued that was a “significant mistake” because it influenced the ultimate decision about the percentage division of the parties’ property interests. That contention, however, cannot be reasonably sustained. The primary judge fixed the value of the husband’s ordinary unit-holding at $738,425 (at [128], [138]) and found that his contribution-based 52 per cent share of the property was quantified at $826,928 (at [168]). The primary judge then went on to consider an adjustment under s 75(2) of the Act and, based upon the husband’s greater income-earning capacity and the prospect of his future financial advancement by reason of his interest in the Unit Trust, determined an adjustment of 10 per cent in the wife’s favour was appropriate (at [178]-[179], [188]-[189]), meaning the husband’s overall entitlement was quantified at 42 per cent of the net assets. The 10 per cent adjustment in the wife’s favour was not inflated on account of any assumption that the husband’s unit-holding in the Unit Trust was worth more than the evidence actually established. During the hearing of the appeal, the husband’s counsel commendably conceded there was no “specific reference” to the reasons which demonstrated that his Honour relied on any assumption that the husband’s unit-holding in the Unit Trust was worth more than was found, in fixing the adjustment at 10 per cent.

Ground 1(d)

This ground contended the primary judge erred in the exercise of discretion because the result “appears to be unreasonable and plainly unjust”.
The husband submitted his receipt of only 42 per cent of the parties’ property interests was plainly unjust for numerous reasons: the parties agreed at the start of the trial that his contribution-based entitlement was in the range of 55 to 60 per cent; he made greater initial capital contributions; he made greater post-separation contributions; the parties had a similar income-earning capacity; and the parties conducted the proceedings on an “unchallenged assumption” that he could retain his unit-holding in the Unit Trust.
The parties’ respective contributions and income-earning capacity have already been addressed under Ground 1(b). The husband did not sustain his complaints there, so he cannot do so here.
As for the alleged “unchallenged assumption” that the husband could retain his unit-holding in the Unit Trust, there is no evidence of the wife assuming such a state of affairs or of her having given any assurance of that type to the husband. The parties’ contentions about their respective percentage entitlements were quite fluid during the trial. Any expectation or assumption entertained by the husband about the outcome of the property settlement dispute was, according to the evidence, entirely his own.
The wife began the trial contending for her contribution-based entitlement of 40 to 45 per cent, together with an adjustment in her favour under s 75(2) of the Act of 10 to 15 per cent, leaving her with an overall entitlement in the range of 50 to 60 per cent. Her counsel opened on that broad basis. The minute of orders propounded by the wife called for her to receive 60 per cent of the net assets, effected by the sale of the former family home and the husband’s retention of all units in the Unit Trust. The appealed orders, the form of which the husband voluntarily adopted after the reasons for judgment were published, provides for the division of property in 58 per cent and 42 per cent proportions, effected by the sale of the former family home and his retention of all units in the Unit Trust. The ultimate result was therefore modestly more favourable to the husband than that for which the wife contended and within the margins of the dispute, as constructed by the parties.
Any cash adjustment payable by the husband to the wife under the appealed orders will only result from the wife not receiving her full 58 per cent entitlement from the net proceeds realised on the sale of the former family home. The husband’s assertions in the appeal that he definitely will have to pay a cash adjustment to the wife and, further, it will be such a substantial amount that it will deprive him of the chance to retain his unit-holding in the Unit Trust are entirely speculative.
We are unpersuaded the result was so unreasonable or plainly unjust as to impugn the exercise of discretion (House v The King (1936) 55 CLR 499 at 504-505).

Ground 3

This ground contended the primary judge failed to give any or adequate reasons for:
a)the assessment of the expert evidence given by the Unit Trust’s accountant, called by the husband;
b)the finding, erroneously made, that the parties agreed the value of the husband’s units in the Unit Trust should be increased by an “uplift factor”;
c)the determination of the value of the husband’s units in the Unit Trust;
d)the failure to take into account the husband’s “beneficiary loan accounts” with the Unit Trust and the updated draft financial statements of the Unit Trust in determining the value of the husband’s units in the Unit Trust;
e)the dismissal of the non-periodic child support provided by the husband as a relevant matter;
f)the finding that the husband failed to make proper disclosure;
g)the finding that the wife had made proper disclosure;
h)the finding that it was significant the husband had not compelled his mother to give evidence at trial;
i)not finding it was significant the wife had chosen not to subpoena the husband’s mother to attend trial; and
j)not finding it was significant that the wife’s mother failed to attend trial in answer to a subpoena issued to her at the husband’s request.
As an introductory generalisation, the obligation of a judge to give adequate reasons is the manifestation of the duty to rationally and satisfactorily explain the result embodied in the appealed orders; not a duty to explain how every factual discrepancy in the evidence adduced by the parties is individually decided or discarded (Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62]; Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 385-386).
During submissions in the appeal, the husband conceded sub-grounds (e), (h) and (i) could not be sustained and they were abandoned.
In respect of sub-grounds (a), (b), (c) and (d), the husband agreed they were essentially the same complaint expressed in different ways. The primary judge accepted the evidence of the Unit Trust’s accountant about the value of the husband’s unit-holding in the Unit Trust, save that his Honour did not discount the valuation in the same manner as the accountant, as his Honour determined to disregard the debt allegedly owed by the husband to the Unit Trust under the loan account. His Honour’s reasons for that finding were ample (at [109]-[114], [119]-[126]) and need not be repeated. Nor need we repeat our explanation for why the primary judge erred by failing to similarly disregard the alleged debt as an asset of the Unit Trust in the valuation process.
Sub-grounds (f) and (g) were aspects of the appeal prosecuted on false premises. The primary judge made no finding at all that the husband “failed to make proper disclosure”. His Honour only commented upon the lack of quality which attended the evidence adduced about the value of his unit-holding in the Unit Trust and why the husband was being paid trust distributions nearly twice as large as his ordinary unit-holding justified. Conversely, the primary judge made no finding at all that the wife had made “proper disclosure”. For reasons earlier given, the husband’s allegation of the wife’s failure to give proper disclosure ceased to be an issue at trial, so there was no need for any finding to resolve that particular factual dispute. There was no need to give reasons for a finding not made.
In respect of sub-ground (j), the husband apparently issued a subpoena to the wife’s mother requiring her to attend Court and give evidence, but she did not attend. If the husband was dissatisfied with that situation it was up to him to request the primary judge to issue a warrant for the wife’s mother’s arrest. It was not for the wife to ensure her mother’s compliance with the husband’s subpoena. The husband did not make any such application to the primary judge. The issue was not even raised, so how the husband could now complain of an absence of reasons to explain an uncontested issue remains a mystery.

Re-exercise of discretion

The appeal should succeed in part by reason of a single factual error which made a difference of $24,512 to the aggregate value of the parties’ property interests.
As the Full Court recently explained in Marcin & Marcin (2020) FLC 93-956 at [160]-[170], provided neither party wants to adduce contested evidence about current circumstances or material changes since the appealed orders were made, discretion may be re-exercised and substitute orders made by this Court to rectify simple mathematical error.
That approach was not possible in Marcin & Marcin because, there, the appellant wanted to adduce more evidence of that kind (Marcin & Marcin (No. 2) [2020] FamCAFC 142 at [4]-[5]), but that is not the case here. In his Notice of Appeal, the husband sought that this Court re-exercise discretion under the Act by adjusting the appealed orders in two limited respects: first, by changing the percentage division (in Orders 4(c)(i) and 5); and secondly, by substituting a different value for the husband’s unit-holding in the Unit Trust (in the Schedule of assets and liabilities annexed to the orders).
There is no warrant to change the percentage division in the appealed orders, for the reasons given in the discussion of Grounds 1(b) and 1(d).
The solitary error can, however, be rectified by the substitution of $713,913 for $738,425 in the Schedule of assets and liabilities annexed to the appealed orders. The husband’s counsel expressly conceded we could do so, without the need for the husband to adduce any fresh evidence. The wife’s counsel also conceded that would be an appropriate way to determine the appeal.
In the re-exercise of discretion, subject to finding the value of the husband’s unit-holding in the Unit Trust to be $713,913 on the available evidence, we concur with and adopt the primary judge’s other findings of fact as they were applied to the mandatory statutory considerations under ss 79(2), 79(4) and 75(2) of the Act. We are satisfied that the outcome under the appealed orders, allowing for the adjustment of value, is just and equitable.

Costs

On 13 February 2020, the Regional Appeals Registrar ordered the parties to file a schedule of costs no less than seven days in advance of the appeal hearing if they intended to make an application for costs. Neither party did so. Leave was refused at the hearing for them to file the schedules belatedly, given both counsel conceded procedural orders should be the subject of compliance and neither advanced any reasonable explanation for the default. There will be no order as to costs.

I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Austin & O’Brien JJ) delivered on 20 July 2020.

Associate:

Date: 20 July 2020